Taubman snags Polo for outlet, Simon readies second phase

With six months to go before two outlet malls are set to open in Chesterfield, tenants are very much in play. And the most recent buzz is that Polo, an anchor tenant for outlet centers, has signed with Taubman Prestige Outlets.

In an earnings call Feb. 14, Taubman officials were asked about signing Polo for the Chesterfield outlet, set to open Aug. 2. “I really can’t comment on individual tenants, but we’re very happy with the group of retailers that we’re bringing,” said Robert Taubman, chairman, president and CEO of Taubman Centers Inc. Earlier in the call he said the situation in St. Louis is competitive. “We have said for some time if two centers were built, it would fragment the market, both for retailers and customers,” he said. “This is clearly the situation.”

For its part, officials with Simon Property Group, the developer behind St. Louis Premium Outlets, has quietly begun talking to tenants about a second phase of development. “It’s indicative of how well our lease-up is going,” said Michele Rothstein, a Simon spokeswoman, who said St. Louis Premium Outlets is more than 90 percent leased. It is set to open Aug. 22.

For more than a year, developers have been racing to build outlet centers just a few miles away from each other and from the Chesterfield Mall.

Taubman Prestige Outlets, a $150 million development on North Outer 40 east of Boone’s Crossing, is being developed by Bloomfield Hills, Mich.-based Taubman Centers and Warren, N.J.-based OutletPartners LLC.

St. Louis Premium Outlets, a $100 million project on the south side of Highway 40 east of the Daniel Boone Bridge, is being developed by Indianapolis-based Simon Property Group and Fort Worth, Texas-based Woodmont Outlets.

The outlet business has been a “bright spot” for retailers and developers, said Alex Goldfarb, an analyst at Sandler O’Neill. Nonetheless, the situation in St. Louis is unique. “Normally what happens is two or three deals are announced, but ultimately only one breaks ground.”

Historically, Simon has enjoyed a strong track record in the outlet space ever since buying Chelsea Property Group, an outlet developer, in 2004 for $3.5 billion. “Its been huge for them,” Goldfarb said.

While Simon’s Rothstein stopped short of formally announcing a second phase of development, she said there are definitely discussions taking place about future expansion. “A sign is going to go up soon at the property noting that it’s now leasing phase 2,” she said. “We pretty much have a sense of how phase 2 would lay out. A lot of that would depend on interest.”

Regarding Polo, she referred me to the mall’s website.

But in the past for Simon, Polo has been an important tenant. “They’re one of the most important outlet retailers they do,” said Andrew Johns, an analyst at Green Street Advisors. “The Polo stores tend to drive a tremendous amount of traffic.”

Stores like Polo and Nike serve as “magnet tenants,” he said. “If you have them at your project, they’ve given you the thumbs up and they feel they can make money at that site,” he said. Nike has signed with Simon’s St. Louis Premium Outlets.

In St. Louis, Johns said one tenant isn’t necessarily a game changer since both developers have signed major retailers.

Simon’s nascent second phase indicates strong demand, Johns said. How risky is it? “If it was anybody but Simon I’d say yeah, it would be risky. But because they’ve been so successful, they get the benefit of the doubt that they’re not going to make mistakes.”